Understand the complex dynamics of business environments with these comprehensive notes. Covering both internal and external factors that impact businesses, this guide helps you analyse opportunities, threats, and market conditions to make informed decisions.
- Contains typed notes as well as di...
Table of Contents
THE MACRO ENVIRONMENT ............................................................................................................................. 3
ENVIRONMENTAL SCAN ................................................................................................................................ 3
SWOT ANALYSIS (ONLY O AND T).................................................................................................................. 4
PESTLE ANALYSIS.......................................................................................................................................... 4
POLITICAL FACTORS...................................................................................................................................... 5
The constitution: ........................................................................................................................................... 5
ECONOMIC FACTORS .................................................................................................................................... 5
ETHICAL FACTORS......................................................................................................................................... 6
SOCIAL/SOCIO-ECONOMIC FACTORS .......................................................................................................... 6
TECHNOLOGICAL FACTORS.......................................................................................................................... 6
LEGAL FACTORS ............................................................................................................................................ 7
ENVIRONMENTAL FACTORS ......................................................................................................................... 7
THE MARKET ENVIRONMENT ........................................................................................................................... 7
PORTER’S 6 FORCES ......................................................................................................................................... 8
LEVEL OF RIVALRY (CURRENT COMPETITORS) .......................................................................................... 8
THREAT OF NEW ENTRANTS ......................................................................................................................... 9
AVAILABILITY OF SUBSTITUTE PRODUCTS.................................................................................................. 9
THE POWER OF SUPPLIERS: ......................................................................................................................... 9
THE POWER OF BUYERS: ............................................................................. ERROR! BOOKMARK NOT DEFINED.
THE POWER OF COMPLEMENTARY PRODUCTS:........................................ ERROR! BOOKMARK NOT DEFINED.
THE MICRO ENVIRONMENT- BUSINESS OPERATIONS (FUNCTIONS WITHIN THE BUSINESS) ................. 11
8 BUSINESS FUNCTIONS.............................................................................................................................. 11
PURCHASING FUNCTION: ........................................................................................................................ 11
SUPPLY CHAIN MANAGEMENT (SCM) CAN BE PART OF THE PURCHASING FUNCTION OR AS A
SEPARATE BUSINESS FUNCTION........................................................................................................... 11
PRODUCTION FUNCTION:........................................................................................................................ 12
QUALITY CONTROL: ................................................................................................................................. 12
FINANCIAL FUNCTION: ............................................................................... Error! Bookmark not defined.
HUMAN CAPITAL (HC) FUNCTION/ HUMAN RESOURCES (HR) FUNCTION: ........... Error! Bookmark not
defined.
MARKETING FUNCTION: .......................................................................................................................... 16
PUBLIC RELATIONS FUNCTION: ............................................................................................................. 17
ADMINISTRATIVE FUNCTION: ................................................................................................................. 17
GENERAL MANAGEMENT FUNCTION: .................................................................................................... 17
OVERALL BUSINESS AS AN ORGANISATION: ........................................................................................ 18
,CHAPTER 1
BUSINESS ENVIRONMENTS
The Macro Environment
Forms part of external environment.
Business has no control over events in the external environment.
Needs to consider events and design strategies to adapt.
Tools are used to help determine how the business should react to eliminate threats
and utilize opportunities to achieve a competitive advantage.
Competitive advantage: the business’ edge in the market/ over competitors, it
enables the business to exploit the advantage to sell more, attract customers or
reduce expenses (all increases profit).
Tools used: SWOT, PESTLE and environmental scan
ENVIRONMENT PESTLE
SWOT (O AND T)
ENVIRONMENTAL SCAN
Environmental scanning: The process of obtaining information about possible
current/future events that can impact the business’ performance and then
adjusting/developing plans to deal with the events.
It is done to ensure the business is prepared for internal and external environment
development by adapting quickly to realign resources in order to take advantages of
opportunities and overcome threats.
, Environmental scanning process in the micro environment:
- Business scans macro environment to identify issues.
- SWOT (Only O and T) analysis used to evaluate factors in macro environment
- PESTLE used to identify specific opportunities and threats in the macro environment.
SWOT ANALYSIS (ONLY O AND T)
Opportunities and threats refer to issues in the macro and market environment.
The exchange rate may decrease and the importation of raw materials may threaten
the business’ profitability.
PESTLE ANALYSIS
Each letter represents factor that could threaten business or be an opportunity to
create/strengthen the competitive advantage (in macro environment).
POLITICAL
ENVIRONMENT ECONOMIC
LEGAL SOCIAL
TECHNOLOGY
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